Maintaining Bank Compliance - Understanding the Regulatory Expectations of the Information Security Officer

Maintaining Bank Compliance - Understanding the Regulatory Expectations of the Information Security Officer

The information security officer (ISO) plays an integral role in helping organizations meet regulatory expectations, compliance requirements, and other obligations. In a broad sense, the ISO is charged with keeping the IT programs of an organization safe from internal and external threats. This entails creating enforceable policies and processes to protect the institution’s computer infrastructure, networks and data as well as satisfying regulatory compliance requirements.

More specifically, the ISO is responsible for a wide range of duties, from ensuring appropriate software is installed to thwart viruses, spyware, and other harmful threats to facilitating IT security training and communicating security strategies to senior management. These tasks are critical because an information security breach can cause substantial problems, including the loss of sensitive corporate or customer data; interruption to the business and financial loss; and damage to the company’s reputation and brand.

ISO Regulatory Requirements and Expectations

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Financial institutions are highly regulated organizations; therefore, the ISO fills a unique role in maintaining compliance to these regulations. Much of the ISO’s role started with the Gramm-Leach-Bliley ACT (GLBA) of 1999. GLBA, for example, broadly dictates that institutions implement the necessary security measures to safeguard their sensitive information and that of their customers. This involves ensuring information is effectively protected whenever it is being accessed, processed, and stored. The statements in the GLBA outlining information security have been expanded over the years by the Federal Financial Institutions Examination Council (FFIEC) into a set of booklets that in turn define the ISO role.

The FFIEC covers various issues related to information security in great detail, including the expectations and requirements for the ISO. According to the FFIEC IT Examination Handbook’s Information Security booklet, financial institutions should have at least one person who is dedicated to serving as an in-house ISO. The handbook specifically explains: “Management should designate at least one information security officer responsible and accountable for implementing and monitoring the information security program. Information security management responsibilities may be distributed across various lines of business depending on where the risk decisions are made and the institution’s size, complexity, culture, nature of operations, or other factors.”

Ensuring Bank Compliance

In this role, the ISO must have the appropriate authority, stature within the organization, knowledge, background, training, and independence to complete the assigned duties successfully. To ensure the proper separation of duties, that individual should be independent of the IT operations staff and should not report to IT operations management. The ISO is responsible for overseeing and coordinating security efforts such as information technology, human resources, communications, legal, finance management, and other groups. The ISO must lead risk assessment efforts that guide security initiatives and standards throughout the entire organization as well as consult on the IT budget; performance management; professional development and training; and participate in planning activities while also working with auditors, both internal and external, to test and validate controls. The ISO should be able to point to documentation that acts as evidence of the institution’s practices, including reports, logs, meeting minutes, completed checklists, etc. This is the most time-consuming element of the ISO role, but it’s the only way to prove that all compliance areas are aligned and working as intended.

Meeting all these expectations and requirements can be challenging for an ISO, especially one employed by a smaller institution with fewer resources. However, financial institutions can capitalize on the services of a third-party, virtual ISO (VISO). A VISO platform serves as a risk management solution that addresses the regulatory expectations and responsibilities of the ISO. While a virtual ISO cannot replace the need for an actual ISO at a financial institution, it can certainly help manage the responsibilities and streamline the local ISO’s duties. A VISO does not only provide additional technical knowledge, but it can give institutions the peace of mind of knowing an expert will always be available to help the internal ISO meet regulatory requirements, bank compliance, and other responsibilities.